Daily Market Update

U.S. Dollar mostly flat, FOMC Minutes at 2PM

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The U.S. Dollar stuck around familiar ranges mostly unchanged as some issues such as the government shutdown remain unresolved.

Overview

What does seem to be improving, however, is the air surrounding the trade conflict with China as both administrations are saying that talks are ongoing and making some progress.

The market is hoping to buy into the idea and almost all stock exchanges across the globe went up overnight. FX Market flows have slowed down ahead of FOMC Minutes to be released later at 2PM as well as the major risk event of next week on Monday, January 14th, as the U.K. Parliament votes on Prime Minister Theresa May’s Brexit deal.

What to Watch Today…

EUR

The Euro retreated and conceded some ground this morning based on negative data out of Germany that puts into question whether the region will find much economic momentum going into this first quarter. Industrial Production for the month of November was expected to expand by 0.3%, but shocked coming in as a (-1.9%) contraction. The yearly average came to a (-4.7%) loss for the year, the worst performance since 2009.

An economic slowdown is not helpful to our Euro forecasts that suggest appreciation, but a rebound may come in as trade dynamics normalize and Brexit finds a definite answer. Over the years, the Euro has proven to survive other major challenges and could see increase as a reserve currency with central banks and others preparing for eventual tightening.

CAD

The “Loonie” has been on a tear lately, improving by 2.5% thus far into this very infant year. Oil prices could be ready to climb above $50.00 and stay there per some analysts, plus many hope that OPEC countries’ pledges to curtail production will help.

Weak news in the U.S. and optimism after a good labor situation was revealed for Canada on Friday will help its currency stay afloat. Current levels are the best in a month against the greenback. We expect the Bank of Canada to remain positive but cautious, without changes to policy.

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